American Funds New World Fund (NEWFX) Class A

Since 2008-2009 global economic crisis, Emerging Markets Equities and Bonds have outperformed other asset classes for the past 3 years. One of the most popular diversified emerging markets stock funds is American Funds New World fund. The fund review is described below.

American Funds New World A (NEWFX)

The investment objective of American Funds New World fund is to seek long-term capital appreciation. The fund invests majority of assets in common stocks of companies with significant exposure to developing countries. It invests >35% of assets in equity and debt securities of issuers in developing economies and/or markets.

Fund Details

American Funds New World 

• Fund Inception Date: 06/17/1999
• Ticker Symbol: NEWFX
• CUSIP: 649280104
• Beta (3yr): 0.86
• Rank in category (YTD): 11%
• Category: Diversified Emerging Markets
• Distribution: 1.56%
• Capital Gains: 0%
• Expense Ratio: 1.04%  
• Net Assets: $ 18.65 billion
• Number of Years Up: 7 years
• Number of Years Down: 4 years
• Annual Turnover Rate: 20.00%

Updated on 12/16/2011

David C. Barclay has been managing this emerging markets stock fund since its inception in June 17, 1999. The total net assets of this equity fund are $18.65 billion. The dividend yield of this NEWFX fund is 1.56% and is distributed on yearly basis. Last year, it distributed $0.78 dividend for its investors. The fund is in the category of Diversified Emerging Markets. The fund has 1.04% annual expense ratio. The average ratio in the category is 1.67%.

This equity fund has 3-stars rating and gold rating from Morningstar. This emerging markets stock fund has a YTD return of -9.12%. The fund has recorded 7 years in positive return and 4 years in negative return. The best achievement was recorded in 2009 with 52.21% and the worst 1-year total return in 2008 (-46.32%). The performance of this fund based on the load adjusted return is:

• 1-year: -13.10%
• 3-year: 14.52%
• 5-year: 3.45%
• 10-year: 12.55%

Investors that are interested to invest in this fund, can simply open a brokerage account with the initial investment of $250. Same amount applies for IRA account. The minimum subsequent investment needed is $50. The fund is available for purchase through 73 brokerages. They are JP Morgan, Raymond James, Schwab Retail, Vanguard, Merrill Lynch, Firstrade, Fidelity Retail Funds Network, E Trade Financial, E Trade No Load Fee, MSSB Brokerage, Bear Stearns, etc. The other classes of this fund are Class B (NEWBX), Class C (NEWCX), Class F-1 (NWFFX) and Class F-2 (NFFFX).  This AF fund uses Lipper Emerging Markets Fund Average as its benchmark.

As of October 2011, the top 10 equity holdings of this American Funds New World Fund are America Movil (2.3%), Nestle (1.3%), Samsung Electronics (1.1%), MTN Group (1.0%), Hankook Tire (0.8%), Agricultural Bank of China (0.8%), Magnit (0.8%), Teva Pharmaceutical Industries (0.8%), Novo Nordisk (0.8%) and Baxter International (0.8%). The five largest industry holdings are Commercial Banks (7.7%), Wireless Telecommunication Services (5.9%), Oil, Gas & Consumable Fuels (5.8%), Pharmaceuticals (4.2%) and Automobiles (4.0%).

Per fund’s prospectus, the principal risks of this popular emerging markets stock fund include: market risk, growth style investment risk, foreign exposure risk, developing countries risk, bonds risk, investing in lower rated bonds risk, management risk, etc.

Pros:

• Low holdings turnover rate
• Gold rated by Morningstar

Disclosure: No Position

Other EM equity fund:

• T. Rowe Price Emerging Markets Stock (PRMSX)
• Matthews Asia Dividend Investor (MAPIX)